There is a lot of competition in the credit card industry currently. Almost all the credit card issuers are trying to attract higher credit rating individuals to accept their cards. One of the strategies used by credit card issuers is the balance transfer credit cards, where customers can transfer their outstanding balance on one credit card to another, thereby switching cards. In return customers get some benefits, the most prominent being a 0% interest rate on the balance transferred for a limited introductory period which could vary between 6 – 18 months or sometimes even higher.
A balance transfer offer is good but not all the time. Therefore customers need to check certain essential things before they go for the balance transfer. The first thing to check is the duration of the 0% interest rate offer. If it is 6 months, then a balance transfer is not really worth the risk and the trouble. It has to be at least 12 months in order to help you benefit from the transfer. The 12 months introductory period should be available to help your credit rating gets better, irrespective of the promotion; those with lower credit get a shorter introductory period than those with a higher credit rating.
The next thing to check is if the 0% APR is offered both on balance transfers and purchases or only on the balance transfer. The former option is better because a lot of credit card issuers, use the monthly payments for customers to pay the balance transfer amount, leaving the purchase charges outstanding and thus incurring interest. So customers have to protect themselves against this nasty strategy which makes the balance transfer card ineffective to say the least.
Customers should also find out about the APR on the credit card after the introductory period. If this is too high, then the balance transfer is not a good option. They should also check for the balance transfer fee, which could be as high as 5% or even more in some cases. For a higher outstanding balance this fee, will go up making your balance transfer a non-profitable affair. In fact some credit cards require you to pay part of the outstanding balance as down payment which is not possible in most cases. Credit card customers should also be aware of the fine print, which is in the terms and conditions that could come as a surprise later.